Tag: Tomasz Tunguz

• Blockchain gas fees are dropping — that’s good

  I watched the BlackBerry movie the other week and right away I thought, “whoa, is Jim Balsillie really like that?” Supposedly, kind of. Either way, it was a good movie that naturally ended with the fall of BlackBerry, with Balsillie not getting an NHL team, and with Mike Lazaridis dismissing the first iPhone as a toy. “Who wants to use a phone without a keyboard?”

  We all know these stories. In fact, they feel trite in retrospect. There’s Blockbuster, Kodak, and countless others. But these moments are clearly a lot harder to identify in the moment. And today, at least for me, it feels like this moment for crypto and blockchains.

  It’s easy to dismiss this space. Among other things, a blockchain is an objectively worse database. They’re slower than today’s alternatives. They require more computing power. There’s no customer service when something goes wrong. And, it generally costs a lot more to save new information to a blockchain (this cost is called a gas fee).

  At the peak of the market in 2021, the average quarterly gas fee (cost per transaction) on the Ethereum network reached about US$37. Given this, nobody wanted to use this database to buy a $2 coffee. (However, many people were, at least at the time, willing to use it to buy expensive NFTs.)

  But as Tomasz Tunguz outlines in this great post called “Gas Gas Revolution”, the cost of saving data to a blockchain has dropped dramatically over the last few years. And all signs indicate that this trend is only going to continue. So what happens when it becomes cheap/basically free to save to these worse databases?

  Well, if you believe that “decentralized” and open databases are going to unlock powerful new innovations, the correct answer is probably: a lot. And then all of a sudden, they’ll be better databases.

  2023.10.27

• Shares vs. tokens

  

  Crypto tokens are kind of like shares in a company, or at least they can be pretty similar if one wants them to be. Here is an interesting post by Tomasz Tunguz comparing the two. More specifically, he looks at inflation and deflation for both kinds of assets. According to Tomasz’s numbers, the average annual change in share count for software companies is about +5% (see above chart). Though there are some notable exceptions, such as Apple, who are aggressively buying back shares and decreasing their counts.

  The median inflation rate for crypto tokens, on the other hand, is much higher. Based on the projects that Tomasz chose for his post, the median rate is about 25%. Given the age of most of these crypto tokens, this generally makes sense. Younger companies also tend to have higher inflation rates as they raise outside money and issue new shares to attract talent. But this is likely to change as the space matures. Those of you who are following closely, will know that Ether is set to become deflationary sometime later this year.

  But going beyond these inflationary and deflationary numbers, what is more interesting to me is how similar shares and tokens can be, but also how meaningfully different they can be at the same time. They are similar in that they represent some sort of value, they can be bought, sold, loaned and generally used to earn a yield, and they can be used for governance matters, among other things. Where they are the most different is that (1) we don’t really know how to value most tokens right now and (2) tokens can have utility.

  I am confident that (1) will change as the space evolves. It is still very early days and valuation methodologies will get figured out. (2) will also grow and evolve into things that are unimaginable today, but even right now you have the option of using your crypto tokens to buy things like NFTs. This option should, in theory, have some sort of value attached to it. Though nobody has any clue what these NFTs will be worth ten years from now and so it’s pretty easy to poke fun at JPEGs of Apes. But with some new NFT projects seeing over $52 million in trading volume in their first 30 days, my instinct is to learn as opposed to eschew.

  Not every crypto token will have enduring value, just like not every share in a company has enduring value. Some are worth a lot and some are worth nothing. At the end of the day, what matters is the underlying business or project or city that you are becoming a part owner of. And I can tell you that lots of exceedingly smart people are working on exactly this for the token space.

  2022.03.28

• The value of relative pricing comparisons

  

  I find the topic of pricing incredibly interesting. How much is someone willing to pay for item X? I’ve said this before, but pricing was one of my favorite classes in business school.

  Here is a line that I really liked from a recent blog post by Tomasz Tunguz’s on price anchoring:

  “Relative pricing comparisons are among the most common method of price rationalization.”

  The topic of his post may not be all that interesting to this audience – it’s about software as service platforms – but the principles should be. 

  In Tomasz’s post he talks about how companies building SaaS products aimed at salespeople will often have their pricing compared to that of Salesforce. In other words, people might say to themselves: Salesforce costs $X per seat. Is this other product worth half of $X? Salesforce is the anchor.

  I can tell you that I do this all the time. (Do you?) I’ll say to myself, condos of this build quality are selling for $Y in this neighborhood. Is this other neighborhood better or worse? If better, how much of a premium might someone apply to it?

  So if you’re in the business of pricing products, you may want to give some thought to how your customers might be anchored when assessing your offering. Relative pricing comparisons allow us to rationalize dollars in our mind.

  2017.05.11

• The changing nature of how and where we work

  

  Yesterday I came across a post called, The Workplace of the Future, by venture capitalist Tomasz Tunguz. In it, he references a book called, Cubed: A Secret History of the Workplace, and talks about the changing nature of how and where we work.

  What’s immediately interesting to think about is how recent the modern workplace really is:

  The information worker is a relatively new concept. Peter Drucker coined the term in the 50s. By then companies had already developed new ways of housing information workers. The very first information workers were accountants hunched over “Bob Crachit” desks in the back rooms of factories. Booming railroad companies demanded more organization and created offices within the new skyscrapers along the Chicago skyline. With these new offices came stacks of paper and folios, and cabinets in which to file them. Then, the Mad Men wrought an era of typewriters and mahogany corner offices. Next, Bell Labs invented the suburban office park, moving offices from the city as part of post-war suburbanization and in the 70s, Herman Miller crafted the now-ubiquitous cubicle, which was called the “Action Office” when it launched. Oh, the irony.

  It’s also interesting to think about how quickly things seem to be changing. Up until quite recently, everybody seemed to be singing the virtues of the open office plan. However, today, more and more companies are shying away from that kind of space planning:

  In 2011, the organizational psychologist Matthew Davis reviewed more than a hundred studies about office environments. He found that, though open offices often fostered a symbolic sense of organizational mission, making employees feel like part of a more laid-back, innovative enterprise, they were damaging to the workers’ attention spans, productivity, creative thinking, and satisfaction. Compared with standard offices, employees experienced more uncontrolled interactions, higher levels of stress, and lower levels of concentration and motivation. When David Craig surveyed some thirty-eight thousand workers, he found that interruptions by colleagues were detrimental to productivity, and that the more senior the employee, the worse she fared.

  Today, the most radical changes are appearing in startup offices around the world and are being driven by a desire to have spaces that embody their unique corporate cultures. This means everything from cool brick-and-beam architecture to bike racks in the office to flexible rooms and spaces that encourage mobility throughout the day. And to further reinforce these cultures, companies are creating positions like Chief Culture Officer and Chief Vibe Officer.

  But as I’ve said before on ATC, the other big shift is simply location and the return to cities. More and more startups, for example, are choosing San Francisco over Silicon Valley and it’s because the city is where young people want to live. It’s increasingly where the talent is. This has already brought about many changes in workplace design, but it likely bring about many more. 

  Image: Airbnb’s San Francisco Office

  2014.05.17